THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LOU DOBBS, CNN ANCHOR: Tonight, Prime Minister Tony Blair, our closest ally in the war on terror, has won an historic third term in office. But it appears the Labor Party has been severely reduced in parliament. What does his election mean for the United States? We'll be going live to London for the latest results and political analysis. (BEGIN VIDEOTAPE)

ANNOUNCER: Also ahead on LOU DOBBS TONIGHT, two bomb explosions in New York. New fears about the risk of a terrorist attack in this country.

State of insecurity. A deadly new attack on Iraqi recruits. Will the Iraqi security forces stand firm against the insurgents?

And the Army's recruiting slump. The U.S. Army misses its recruiting target for the third straight month.

This is LOU DOBBS for news, debate and opinion, tonight.

(END VIDEOTAPE)

DOBBS: Good evening.

Tonight, British Prime Minister Tony Blair has won an historic third term in office. But exit polls just released over the past hour give Blair's Labor Party a sharply reduced majority in the British parliament. Those exit polls show the Labor Party, 356 seats, Michael Howard's conservative party projected to have 209.

A key question now is how long Blair will remain prime minister before he hands over power to another member of his cabinet. For Michael Howard, the result is a devastating blow to his conservative party, the party that brought Mrs. Thatcher to power a quarter century ago.

Our senior political analyst, Bill Schneider, reports from London.

Bill, just how well did Tony Blair do in this referendum on his leadership and his party's place in parliament?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: It's a classic case, Lou, of a glass half full or half empty. The good news for Mr. Blair is he did win an unprecedented third term. No Labor Party leader has ever done that. In fact, only one prime minister in the last century has won three times in a row, and that was a conservative leader, Margaret Thatcher.

So he's matched her record, but with a sharply reduced majority. The exit polls project now that he'll have only a 66-seat majority, down from 161 going into this election.

Now, that puts him at some risk because there are a lot of members of his party who are opposed to Mr. Blair on issues like the Iraq war, or critical of his leadership, and who would very much like to see him turn over power sooner rather than later to his chancellor, who is essentially the secretary of the treasury, Gordon Brown. And the pressure will now be on Blair to do just that.

DOBBS: Bill, let me ask you what seems to be the -- the appropriate question with exit polls just now being released. What were the primary issues that persuaded the British voters?

SCHNEIDER: Two in particular, Iraq and -- well, let's say three. Iraq and immigration were issues that were very much on the voters minds. The Iraq issue clearly hurt Mr. Blair.

The third issue that helped the Labor Party was the economy. The economy in Britain is doing pretty well. And the voters are very optimistic.

So the half-full part, the Labor Party won a third term, I think was the economy. The half-empty party was Iraq. And there was also the influence of an issue that rated very high among the voters, and that's their resentment of high levels of immigration under this labor government over the last eight years, and particularly illegal immigration.

Both of those contributed to a sense of dissatisfaction, particularly with working-class voters who are deeply resentful of the growing number of immigrants and illegal immigrants in Britain.

DOBBS: Lady Thatcher decided to depart in advance of this election because she was apparently so disgusted with the campaign of their conservative party. How well or how poorly has the conservative party done in this election?

SCHNEIDER: Well, let's put it this way, the conservative party last time got 33 percent of the vote. This times the exit poll projects they got 33 percent of the vote. That's fairly poor. So they didn't improve their showing at all.

Remember, they've had four leaders since Mrs. Thatcher: John Major, William Hague, Ian Duncan Smith, and now Michael Howard. And they all lost. So the party has clearly lost its footing since Mrs. Thatcher.

But let me give you another figure. The exit poll projects that while the Labor Party will win, only 37 percent of British voters, 37 percent, voted for Blair's Labor Party. That is a shockingly low figure. It is the lowest figure for a victorious party in memory.

DOBBS: Bill Schneider, from London. Thank you. Two bombs exploded outside the British Consulate in New York City today just as British voters were going to the polls. No one was injured. There was little damage as a result of the blast.

The bombs exploded outside the consulate building in midtown Manhattan early this morning. Tonight, police are studying a videotape of the scene.

Jason Carroll has our report.

(BEGIN VIDEOTAPE)

JASON CARROLL, CNN CORRESPONDENT (voice-over): One of these security cameras captured an image which may help investigators find out who was behind two explosive devices that went off outside this Manhattan office building early Thursday. One police source says the cameras are so precise a license plate can be read two blocks away. Police say they have a very good image.

RAYMOND KELLY, NEW YORK POLICE COMMISSIONER: A review of the videotapes from security cameras in the vicinity of the bombing this morning shows a number of pedestrians nearby before the blast. The video also shows a cyclist riding northbound on 3rd Avenue after the blast. A taxicab is also seen on the video passing in front of the location just as the explosion occurs.

CARROLL: The explosion caused minimal damage, shattering a ground-floor window of the building, home to the British Consulate, other diplomatic offices and several businesses. The glass was small but still jarring enough to shake the nerves of those close enough to hear it.

JEFFEREY LAUREN, HEARD EXPLOSION: It woke me up out of the bed. I was worried for a second. I said, "Oh, man, there's a bomb in the street." And my first thought was maybe I'm dreaming.

CARROLL: Inside this concrete planter in front of the building investigators found the source of the blast, the two improvised explosives. Police say the devices were relatively unsophisticated and looked like toy grenades packed with black powder and a fuse.

KELLY: We believe these to be two novelty-type grenades.

QUESTION: What do you mean by that?

KELLY: Like World War II-type. In other words, the types that people might have on their desks.

QUESTION: Were they real or fake?

KELLY: No, they were, as I say, novelty. We believe they were fake grenades. Not active hand grenades.

CARROLL: New York City's mayor cautions against drawing early conclusions about a possible connection between the explosion and elections which took place in the United Kingdom Thursday. MAYOR MICHAEL BLOOMBERG (R), NEW YORK CITY: There is at the moment nobody claiming credit for this. There are no -- there were no calls saying why the explosion, who the target was. We do not know the motivation.

CARROLL: The British consul general says at this point he does not believe the consulate is connected to the blast. He says by Thursday evening it will be business as usual for consulate employees.

PHILIP THOMAS, BRITISH CONSULATE GENERAL: Well, this is election day in Britain. So they are pained (ph) to get on with their work. We have a party here this evening to follow the results of the election. And we'll want to carry on with that.

CARROLL (on camera): One of the security tapes appearses to show the explosive device being thrown, although it's not clear if it was thrown by a pedestrian or by someone in a passing car. What is clear, at this point investigators have no motives and no eyewitnesses.

Jason Carroll, CNN, New York.

(END VIDEOTAPE)

DOBBS: Coming up next, an escalating recruiting crisis for this U.S. Army. General David Grange will be with us next.

And why the Mexican government is now investigating an American citizen after his appearance on this broadcast. Peter Gadiel of the 9/11 Families for a Secure America is our guest here next.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: Insurgents in Iraq today launched a deadly new attack against recruits for the Iraqi security forces. This attack comes one day after a suicide bomber killed 60 police recruits in northern Iraq.

Ryan Chilcote reports from Baghdad.

(BEGIN VIDEOTAPE)

RYAN CHILCOTE, CNN CORRESPONDENT (voice-over): This time, the Iraqi military says they saw the suicide bomber walking up to the recruits, so they shot him. But he was still able to blow himself up, killing at least 13 Iraqis at the Baghdad recruiting center, wounding 20 more.

In an exclusive interview, the deputy chief of staff of Iraq's armed forces told CNN that he thinks these are desperate acts.

LT. GEN. NAISER ABADI, DEP. CHIEF OF STAFF, IRAQI ARMY: They're just trying to bring the attention, get the attention of the media that they're winning. And I don't think they are.

CHILCOTE: Iraq's security forces, he says, are steadily growing, undeterred by the attacks.

(on camera): Statistically, though, has there been a drop because of the attacks?

ABADI: Never, no. On the contrary. We don't have facilities -- enough facilities to accommodate all these people, because you have to man them, train them, equip them, and we can't take all of them.

CHILCOTE (voice-over): Iraq's forces are also coming on line on the battlefield, slowly taking up responsibility from coalition troops. The general believes their nemesis, Abu Musab al-Zarqawi, the most wanted man in Iraq, is on the defensive. But it could take time to catch him.

ABADI: He's cunning and he's had a lot of experience in using people. And I think he's doing a good job.

But he can do it for some time but not all the time. I think sooner or later we are going to catch him. He's bound to make a mistake. And information will come to us.

CHILCOTE (on camera): He says information came just last week that Zarqawi may be holed up in a hospital in the western city of Ramadi. U.S. and Iraqi forces moved in. They didn't find him. But the general says information is still coming in and it's only a matter of time before they catch him.

Ryan Chilcote, CNN, Baghdad.

(END VIDEOTAPE)

DOBBS: And by our calculation here, now more than a thousand recruits for both the police and Iraqi security forces have been killed by suicide bombers.

The wars in Iraq and Afghanistan are making it far more difficult for the U.S. Army to recruit enough soldiers. For a third straight month, the Army has failed to meet its recruiting goals.

The National Guard and the Army Reserve also missed their recruiting target. The Army is recruiting only nine out of every 10 soldiers it requires.

Joining me now from Chicago, General David Grange.

General, good to have you with us.

You and I have talked about these targets being missed before, unfortunately, from the beginning of the year. And from the last few days, an Army and specifically General Richard Myers, saying that this Army, this military is stretched far too thin to meet all of the missions. What in the world is to be done here?

GEN. DAVID GRANGE (RET.), CNN MILITARY ANALYST: Well, recruiting is tough. There's no doubt about it. The reenlistment rates are very high. People that are in generally like the military. And they stay for another term, at least 50 percent of them.

But getting new troops, new seed corn (ph) into the military to be trained is a tough task. But it takes more than each service, each -- each Army or the Air Force. It takes Congress, it takes the administration to set some conditions to make it a little more appetizing to join the force.

DOBBS: The Army, in point of fact, has raised the number of recruiters from 3,000 to 12,000 in an effort to meet those goals. That's a lot of people focused on recruiting, isn't it?

GRANGE: It is. But, again, you hear a recruiter on the street. But I'll tell you what the moms and dads want to hear, and what some of the people that have a choice to go in the military or go into the private sector.

They want to hear a plan. They want to hear that we're going to have a plan that we can sustain the war that the United States of America is in indefinitely. And they also want to hear something said by both the administration and by members of Congress that these GIs will be taken care of equal to the private sector and be taken care of when they become veterans for the long haul.

DOBBS: And as you very well know, what we're hearing instead are the number of reservists and guardsmen returning home -- when they do come out of Iraq or Afghanistan, too often their jobs have been taken away from them, too often during their term of service in Iraq and Afghanistan their families are sacrificing right along with them and are not being adequately supported. And at the same time, both Congress, the administration, as you say, and the Pentagon have not stepped up it seems to many critics and said we cannot -- cannot sustain the kind of service we're requiring of these young men and women who are serving in the global war on terror.

Do you see that as a considerable part of the pressure that is now being placed on recruiting?

GRANGE: Absolutely. You see, you have to have -- two things are required from the leadership of this nation. And I'm talking again about Congress and the administration. Not only the Pentagon.

And that is that the trust is understood, it's established through proper communications, that actions are going to take place. And they will in fact take place. That trust has to be there to help the recruiting.

It just can't be a sergeant -- staff sergeant on the street saying this is going to be a great deal, go for it. You are going to get education, you're going to have excitement, you're going to see the world.

It has to be more to it. And it has to come from the higher levels. Trust and good communication. DOBBS: All right. In my opinion -- and I'd like to hear your view, General -- General Myers too a strong step forward in acknowledging the difficulties that are being faced by the U.S. military right now and some of the constraints in meeting the mission that could be assigned to the U.S. military. At the same time, the U.S. Army is saying that it's missing recruiting goals because it's spring and this is a difficult time of year in which to recruit.

Is that really factual, that there's a spring trough to recruiting?

GRANGE: Well, I believe, Lou, statistics do show that. Part of it is people get out of school in the summer.

People that have aspirations to get a particular job in the summer, it doesn't happen. So they look at the military as another choice. And it just kind of, OK, I'm done now with school, what's my next step? And you have this attitude where now is the time to make that choice.

DOBBS: General Dave Grange, thank you for being here, as always.

GRANGE: My pleasure.

DOBBS: Coming up next, the shipment of some American jobs to cheap foreign labor markets is now illegal in another "New" state. We'll have that story for you next.

And an outrageous act by the Mexican government. The government of Mexico is now taking legal action it says against an American citizen who is among those leading the fight against our broken borders. That citizen is our guest tonight.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: New Jersey's governor, Richard Codey, today signed into law a bill that prevents New Jersey from outsourcing government contracts to foreign countries. Governor Codey today said the legislation is "an important step to protect our workers and keep jobs from going overseas. If a company wants to take jobs from our hardworking families and send them overseas, then it will not do business with this state."

That law states only American citizens authorized to work in the United States can work under a New Jersey state contract. The bill applies to the executive branch of state government, the legislature and any independent state authority. The law does not apply to county municipal or school district contracts.

The state of Maryland has a similar law now on its books, and dozens of other states are now considering measures that would ban the outsourcing of American jobs to cheap overseas labor markets under state contracts. A new opinion poll shows the vast majority of us want federal and local authorities to stop the flood of illegal aliens into this country. The results of the Zogby International poll should be a clear indication for our lawmakers in Washington that the American public now wants our immigration laws to be enforced.

Lisa Sylvester reports from Washington.

(BEGIN VIDEOTAPE)

LISA SYLVESTER, CNN CORRESPONDENT (voice-over): Local and state police officers' hands are tied when it comes to arresting people who are in the country illegally. But when more than 1,000 likely voters were asked, "Do you agree or disagree that local and state police should help federal authorities enforce laws against illegal immigration?" a whopping 81 percent said yes. Only 14 percent disagreed.

JOHN ZOGBY, ZOGBY INTERNATIONAL: A majority opposed illegal immigration. In fact, when you combine those two terms, "illegal and immigration," it really conjures up a considerable amount of negatives. And, in fact, we find that it's really across the board.

SYLVESTER: President Bush has proposed a guest worker program to bring in even more foreign workers. Voters were asked, "Do you support or oppose the Bush administration's proposal to give millions of illegal aliens guest worker status and the opportunity to become citizens?" Only 35 percent gave their support, 56 percent said no.

The highest opposition to illegal immigration comes from Democrats, African-Americans, women and people whose household income falls below $75,000, those with the most to lose in the job market.

The minutemen helped bring attention to the nation's poorest borders. Respondents were asked, "Do you agree or disagree that the federal government should deploy troops on the Mexican border as a temporary measure to control illegal immigration?" A clear majority, 53 percent, agree, 40 percent disagree.

PHIL KENT, AMERICAN IMMIGRATION CONTROL FOUNDATION: The Minuteman program highlighted the fact that we need more tighter border security. So I think these numbers again are good. It's a good civics lesson for the American people. It shows our elected leaders that we want action.

SYLVESTER: So while the public wants tougher borders, politicians are pushing to leave them open. A real disconnect.

(END VIDEOTAPE)

SYLVESTER: Respondents were also asked about the level of legal immigration which would include visa like the H1B and H2B visas. But only 3 percent said the level is too low, 51 percent said it's too high -- Lou.

DOBBS: The disconnect that you referred to, Lisa, between our elected officials and the people of this country is in no -- on no other issue any more dramatic than on the issue of illegal immigration. The Zogby poll is just simply the most recent in a string of polls that show that the American people want their borders secure, they want immigration laws to be enforced, and to clean up what has become an atrocious mess on the part of our elected representatives serving better the interests of U.S. multinationals than the people who are working for a living in this country.

Lisa, thank you very much. Lisa Sylvester.

Coming up next here, the president of 9/11 Families for a Secure America will tell us why he is now under investigation by the government of Mexico.

Also ahead, a local police chief who is taking a novel approach to asserting enforcement of immigration laws.

And a former INS agent testifying before Congress. He says the lack of leadership when it comes tone forcing our immigration laws is putting our nation at risk.

Stay with us.

(COMMERCIAL BREAK)

DOBBS: The House of Representatives today voted to approve the critically important Real ID Act. It will prevent illegal aliens from obtaining driver's licenses in this country. The measure is attached to the $82 billion emergency spending bill for Iraq and Afghanistan.

The House today passed the supplemental and the Real ID Act overwhelmingly by a vote of 368 to 58. The Senate is expected to approve that legislation next week.

Peter Gadiel strongly supports that Real ID legislation. He says it would be a miracle if it becomes law, however. Gadiel is president of the 9/11 Families for a Secure America. He has worked tirelessly to advocate tighter security on our nation's borders and all across the country.

The last time Peter Gadiel was on this broadcast, he demonstrated just how easy it is for anyone, including illegal aliens, to obtain a Mexican ID card, a matricula consular, and in turn use it to obtain a driver's license in some states in this country. Now the government of Mexico says it is investigating Gadiel.

In a sharply-worded letter, the Mexican consul general said, "Our attorneys are currently exploring all legal avenues on this matter to determine responsibilities in the purchase and use of a forged Mexican government-issued ID.

Peter Gadiel joins us here in New York now.

Peter, thanks for being here.

PETER GADIEL, PRESIDENT, 9/11 FAMILIES FOR A SECURE AMERICA: Thanks for having me.

DOBBS: We talked, of course, as we have a number of times, with the consulate of Mexico. They said that the card you have they simply wanted to let you know that it was invalid and they have a far more secure one now.

GADIEL: Right. Well, I took care of that problem. Hal Netkin (ph), a friend of mine out in California, got me -- got me a new one. And while I was in the process, he also got you one.

DOBBS: Oh, thank you. Now I am probably going to be under investigation. May I see the -- both cards?

GADIEL: Sure.

DOBBS: Let's see if we can hold these up. If you can see this, let me ask -- see if I can hold this well enough. This is the old. This rather the new. And this the old here. This is more secure, they say, yet you have attained not only one for yourself, but apparently for me, as well. Thank you.

GADIEL: You're very welcome.

DOBBS: But they say this is far more secure. How did this happen?

GADIEL: They are for sale everywhere. They are not at all secure. And -- but the important thing that people should remember is that it isn't the card itself that -- for example, a driver's license can be counterfeited. But it's not the card itself that's the process, the database at the Motor Vehicles Department that makes the card secure. This -- there is no database, according to the FBI, and even if there were a database in Mexico, it's quite likely the Mexican government would not allow our government access to it, because that would reveal the names and addresses of illegal aliens living in this country.

DOBBS: I don't know to what degree you have got me into trouble along with you, Peter, but it's a risk I'm glad to -- flattered to share with you.

GADIEL: We can share a Mexican dungeon together.

DOBBS: Well, I think that we can reason this thing out, I hope, certainly, with the government of Mexico.

The fact that these cards are so easily duplicated, even the more secure, but also so easily obtained. The issue of matricula consular have been taken up by banks all over the country. They are using these by which illegal aliens can open up bank accounts. Many banks are actually marketing to the people.

GADIEL: Right.

DOBBS: What does -- what do you think is going to happen here? GADIEL: Well, it appears that we have outsourced our lawmaking and immigration policies to governments overseas. I mean, I have with me a letter -- a copy of a letter from the consulate of Argentina, saying that they are about to issue consular cards, as well. So in effect what the government -- our government has done is it has allowed other governments to determine what our immigration policy is. And that immigration policy is essentially no immigration policy, just open borders.

DOBBS: Open borders today. Michael Chertoff, the new head of Homeland Security, down at the border to inspect the border, apparently not believing what he is being told by either the Border Patrol or ICE or any number of us who cover the border and report that 3 million illegal aliens crossed our borders last year. What do you think -- what is it going to take to awaken these people?

GADIEL: Well, it's -- if 9/11 didn't do it, I mean, clearly people in the government are not capable of being awakened. But I think what is happening, and the reason for the 9/11 -- that is to say, the Real ID Act that's been passed, is that the people have been awakened, and the poll that you talked about before shows that to be the case.

DOBBS: Not only has Real ID been passed, but it passed overwhelmingly with a must-pass legislation, certainly the supplemental for Afghanistan -- the supplemental spending bill for Afghanistan and Iraq. But it's clear the Senate will pass it as well.

GADIEL: Right.

DOBBS: The president has expressed his support. What looked like an impossibility for James Sensenbrenner, the chairman of the House Judiciary Committee just two months ago, is very near to being a reality. That has to encourage you, and does it not?

GADIEL: Beyond words. I mean, that it has reached this point is a miracle. That it's going to become law is truly a miracle. There are 600 groups like the ACLU and Service Employees International Union and AFSCME and AFL-CIO and Catholic charities that oppose this, and American Immigration Lawyers Association, all oppose this. And...

DOBBS: Along with all the business groups.

GADIEL: Along with all the business groups, that's right. And so, that this is about to become law is really a miracle, an achievement for the American people over the special interests.

DOBBS: Do you find it amazing that the ACLU -- and I'm selecting them for obvious reasons amongst a host of other organizations that one could -- to hold up the issue of privacy when the ACLU has not even bothered to weigh in on the issue of offshoring, medical records, financial records for 100 million Americans. It's just remarkable.

GADIEL: Well, for a group that allegedly is there to defend the rights of Americans, for them to become a partisan group for noncitizens and illegal aliens is -- shows they have really gone off the rails.

DOBBS: Well, and unfortunately, if they were the only ones off the rails, we could move forward a lot more efficiently. Unfortunately, a lot of organizations are off the rails on the issue of illegal immigration and border security, as you well know.

Peter, we thank you for your work. Your work has been extremely important, as you know, in this fight, and we congratulate you and your organization.

GADIEL: Thank you very much.

DOBBS: Peter Gadiel.

Coming up next here, the police chief in one American town has come up with a novel way to fight our illegal alien crisis in this country. He's our guest next to talk about his approach.

And then, American businesses. Exploiting illegal labor while American taxpayers and of course working men and women in this country are paying the bills. That special report is ahead. Stay with us.

(COMMERCIAL BREAK)

DOBBS: My next guest was so frustrated with the federal government's failure to enforce our immigration laws that he decided to take initiative on his own. Garrett Chamberlain is the police chief in New Ipswich, New Hampshire. He recently charged an illegal alien caught in his town with criminal trespassing. And that forced the illegal alien to go to court, where he was ordered to report to immigration officials.

Chief Chamberlain has been praised for his initiative and his action, and he joins us tonight from Manchester, New Hampshire. Good to have you with us, Chief.

CHIEF GARRETT CHAMBERLAIN, NEW IPSWICH, NH POLICE: Thank you, sir.

DOBBS: The idea of charging illegal aliens with trespassing. How did this concept even occur to you?

CHAMBERLAIN: Well, what happened was initially the first incident that we had was in July of 2004. We had a situation where myself and another officer made a motor vehicle stop in which we determined that nine of the 10 passengers were illegal aliens who had come into the United States from Mexico into California by a human smuggler. We contacted the ICE office here in New Hampshire, and they advised us if they hadn't been convicted of a crime or previously deported, to go ahead and release them.

DOBBS: Just release them.

CHAMBERLAIN: Yeah, go ahead and just send them on their way. Now, this is two weeks before the Democratic convention in Boston, 45 miles north of the city. You know, these people were freely admitting to us that they were in the country illegally, and that they had been smuggled in.

DOBBS: And isn't it ICE's job to detain them and to remove them from the country?

CHAMBERLAIN: Well, that was my understanding, but they instructed us that they had no interest in the people, and to go ahead and release them. And so before I did, I took a photo of them walking down the highway, and I sent that out on a press release. And that's what got some attention.

DOBBS: And the fact that you decided to charge an illegal alien with trespass -- the legal concept, obviously here illegally, how did the idea of trespass occur to you?

CHAMBERLAIN: Well, what happened was after the incident last July, we had another incident in October, in which we were able to take custody of 11 illegals that were living in New Ipswich. ICE did take custody of them, but I instructed my officers that if a situation occurred where we had another alien that they refused to take custody of, that we would apply the state law, which is under revised statutes annotated 635:2, criminal trespass. What that law says simply is that a person is guilty of criminal trespass if they knowingly enter or remain in any place without license or privilege to do so.

My position was that if Mr. Ramirez was in the country illegally, he was in my town illegally.

DOBBS: And, the fact is, that seems, at first, novel, and then, as you cite the statute, perfectly straightforward, and it seems like a basis for police departments all over the country to deal with the issue.

CHAMBERLAIN: Yes, we thought it was. We contacted our attorney general's office here in the state of New Hampshire. They instructed us that they felt it passed what they call the straight-faced test, and we went forward with it.

DOBBS: And, what has been the reaction?

CHAMBERLAIN: It's been rather positive. I've received hundreds of e-mails from people across the country. Everybody saying thank you for using another approach to this issue.

DOBBS: And illegal aliens in New Hampshire -- isn't the first place you start thinking about there being a problem with illegal aliens. Would you describe illegal immigration as a sizable problem for your community?

CHAMBERLAIN: Well, I -- not necessarily for my community, but I know for the state, it is. You know, we've just been in the news with the issue where many departments have been frustrated by the lack of response from ICE and they just don't report the situations anymore. They basically ignore it.

DOBBS: And your department will not be ignoring it and you will be following up with trespass charges from here on? CHAMBERLAIN: Absolutely. The judge in the Jaffrey Peterbough (ph) district court, you know, accepted the plea of guilty from Mr. Ramirez and instructed him to report to the ICE office in Manchester within 72 hours.

DOBBS: And, as so often happens in these matters, whether ICE is apprehending an illegal alien, or whether it is local law enforcement or whatever the law enforcement agent, they are told to show up, but no one follows up to make certain they do.

CHAMBERLAIN: Correct.

DOBBS: Any difference in this case?

Well, in this situation what we will do is we'll contact the ICE office, probably on Monday, and inquire if Mr. Ramirez did report as he was instructed. And if he did not, what we will do is file a motion with the court to ask them to issue a warrant for his failure to comply with the judge's order.

DOBBS: All right. Well, Chief Chamberlain, we thank you for being here, and -- extraordinary initiative and perhaps precedent- setting for law enforcement agencies all around the country.

CHAMBERLAIN: Thank you for the time.

DOBBS: Thank you, sir.

CHAMBERLAIN: Thank you.

Coming up at the top of the hour here on CNN, "ANDERSON COOPER 360." Anderson joins us now with a preview. Anderson?

ANDERSON COOPER, HOST "ANDERSON COOPER 360": Lou, thanks very much.

Yes, coming up on 360, a CNN exclusive. A female prison guard held hostage for two horrifying weeks by convicts faces the man who kidnapped her and sexually assaulted her. Tonight, a dramatic courtroom confrontation and the inspiring story of how this officer made it out alive.

And millions, suffering from insomnia, unable to get a good night's sleep -- some tips that just might help you get some shut eye, once and for all, tonight. Lou?

DOBBS: Looking forward to it, Anderson, as always. Thank you, sir.

How the exploitation of illegal labor in this country is devastating millions of American workers. We'll have that story next. Stay with us. (COMMERCIAL BREAK)

DOBBS: In talking with Chief Chamberlain, he acknowledges that the real problem are the employers of illegal aliens, and to his knowledge immigration -- I.C.E. -- has not followed up in any of the cases in which he has arrested illegal aliens with the employers. But he himself and his department plan to do so.

The exploitation of illegal labor in this country, the focus of a hearing this week before a House subcommittee on immigration and border security. The lawmakers heard clear evidence that the exploitation of illegal labor is simply devastating American workers. Bill Tucker reports.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): From the opening statement, the issue is on the table, in plain language.

STEVEN CAMAROTA, CTR. FOR IMMIGRATION STUDIES: Businesses will continue to say, quote, "immigrants only take jobs Americans don't want." But what they really mean is that, given what those businesses would like to pay, and how they would like to treat their workers, they cannot find enough Americans. Therefore, employers want the United States to continually increase the supply of labor by non- enforcement of immigration laws.

TUCKER: It is a race not only to the bottom, but to drive the bottom lower.

PAUL HARRINGTON, NORTHEASTERN UNIVERSITY: We're close to nine workers for every one job vacancy in the construction industry. In the manufacturing sector, there are about five unemployed -- experienced, unemployed workers, for every one job vacancy in that industry. In the leisure/hospitality industry, that ratio ran at three to one.

TUCKER: For one businessman, it is a brutal, frustrating fact, that is compounded by his local government's support of a day-labor center.

TUCKER: The result? He's reviewing whether he can continue to provide his employees' benefits as he struggles to compete.

REINDL: This whole problem can be fixed, immediately, with no new laws, no new legislation -- just enforce existing laws.

TUCKER: Mr. Reindl did not find that will from the panel. After two-and-a-half hours, the subcommittee adjourned, without taking action.

Bill Tucker, CNN.

(END VIDEOTAPE)

DOBBS: My guest tonight, among those who testified before a House committee on immigration and border security, saying, the lives of our citizens and the survival of the nation depend on solving the illegal immigration crisis in this country. Joining us now from Washington, D.C., Michael Cutler, a former I.N.S. special agent. Good to have you with us.

MICHAEL CUTLER, FMR INS SPECIAL AGENT: Thank you, Lou. As always, good to be with you.

DOBBS: Bill Tucker, reporting that despite -- that -- effectively, a pleading by a citizen to be treated fairly, to have our laws apply equally to all Americans and those who are not citizens. How could that committee simply not respond?

CUTLER: Well, I think they want to respond, but, I think, that the problem is you've got an administration that refuses to fund the positions. They refuse to have the jail space, the special agents, the border patrol, because right now, there's too many people feeding at the trough, feeling that the illegal population helps them to save money, but really, it's false economy. It creates national security threat that we just don't seem want to address.

DOBBS: Before turning to the national security threat, the economic threat, to hear those statistics and those ratios of unemployed Americans to every job in those industries, in construction and the hotel and restaurant industries, for example, jobs that, quote, unquote, "Americans don't want." Certainly, they don't want them at those wages and the conditions that prevail. What is the reaction of the panel?

CUTLER: Well, when I talk to them about it, they do tend to agree with me and, in fact, today, one of the members of Congress said, look, it's the agriculture industry that really needs the illegal aliens or the guest worker program or whatever. And I said, but, look, it's happening across the board, and Americans are being laid off. We're depressing wages, we're depressing the value of labor in a country, and, you know, it's not the way that America should be treating its own citizens. And they agree with you off the record but, you know, where is the backing for meaningful immigration law enforcement?

DOBBS: Well, we await that.

In your testimony, you said that, if we are to gain true national security, we must be able to gain interior security, as well. What do you mean?

CUTLER: Well, look -- pardon me -- the point of it is this, the jobs draw illegal aliens across the border. That's the reason they come here. But immigration fraud is the way that they are able to stay here. And if you look at what happened with the terrorists, they found the loopholes in the system, they were able to hide in plain sight. They do it by immigration fraud. They do it because they know the very little likelihood that anybody will seek them.

So we need to approach immigration enforcement at the border. We need to do an equal effort within the interior. Not just to go after the jobs, but to stop immigration fraud. Because this is where they get the driver's license, they get residencely, they get U.S. passports. They are able to travel freely.

The 9/11 commission in fact, found this was the issue. And we're just not putting the resources into it that we still need desperately.

DOBBS: Michael Cutler. Thank you for being here.

CUTLER: Thank you so much for having me, Lou. Have a great day.

DOBBS: Still ahead here your thoughts and we'll preview what is ahead tomorrow. And how the federal government is making it far more difficult for landscapers in this country to compete, legally.

(COMMERCIAL BREAK)

DOBBS: And now the many industries benefiting from our illegal alien crisis while American taxpayers and working men and women in this country are paying the bills. Tonight, many landscaping companies are hiring thousands and thousands of illegal aliens paying them under the table and paying them next to nothing.

This black market, and the federal government's failure to do anything about it, are making it all but impossible for legitimate landscapers to compete in this country. Casey Wian reports from Los Angeles.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Hows the new trailer set-up working?

CASEY WIAN, CNN CORRESPONDENT (voice-over): Tracey Lester's Chicago landscaping business tries to hire workers through the government's H-2b seasonal visa program. But it reached its cap in January. And now she has a labor shortage. So, she's hiring workers who may or may not be illegal alien, even though all provide what appear to be legitimate documents.

TRACEY LESTER, ARCHITERRA: It's no secret that documents are being sold left and right all over the country. And they are getting better and better and better.

So from an employers perspective you are darned if you do you're darned if you don't. If I don't hire someone because of a suspicion that they are illegal, they have grounds for a lawsuit, discriminative lawsuit. And if I do hire them and it turns out immigration comes in and that they are illegal, well guess what, I get fined.

WIAN: So why not hire American citizens? Despite signs seeking help, there are no takers.

UNIDENTIFIED MALE: I want two more of those and I want nine lavenders.

IRA MEHLMAN, FAIR: It almost forces honest employers to break the law. They understand that by hiring illegal immigrants, they are causing great harm to American society, that it's working to their detriment. But quite honestly, we cannot commit economic suicide. We can't go out of business because the guy down the street is hiring illegal aliens for a fraction of the price.

WIAN: And the government is doing little to stop them.

(END VIDEOTAPE)

WIAN: Mehlman says many Americans don't realize how much their inexpensive illegal alien landscaper really costs in taxes for healthcare, education and other public services -- Lou.

DOBBS: Well, we can put a number on it here on this broadcast, as you know, Casey. The number is $1 trillion in our underground economy in this country, illegal labor a large part of that, illegal employers a large part of that. And laws not being enforced making it all possible. Casey, thank you very much. Casey Wian, from Los Angeles.

Taking a look now at some of your thoughts. Peggy in Canton, Michigan, wrote in to say, "shouldn't the United States be taking action, perhaps sanctions against Mexico for its part in sending its citizens into this country illegally?

Wes Boyd of Greendale, Wisconsin, "I find it disturbing that as you do a report about illegal immigrants working at hotels, I sit in a hotel room that in the guest information packet states, it is possible that your guest suite attendent might not understand or speak English fluently. Almost like they are waving it in our faces."

And Fred in Jeanerette, Louisiana, "when it gets to the point where an illegal alien can run for state representative, congress or even president, then Washington will put their foot down." And many of you wrote in about my interview last night with the legendary Warren Buffett. Christine Garland of Petersburg, Indiana, summed up the thoughts of many of you, "Lou, you made my day, because I felt like I was in the minority thinking about the way the U.S. is heading. Mr Buffett confirmed that my thinking was not eskew."

And Janet Dowell in Martinsville, Pennsylvania, "how refreshing to listen to Warren Buffett. To hear a gentleman with as much money as he has to be sticking up for the middle class. It would be nice if we had more people like him, such as more representatives in congress with his ideas."

We couldn't agree with you more.

Send us your thoughts at loudobbs.com. Each of you whose e-mail is read here receive as copy of my book "Exporting America." And you can sign up for our e-mail newsletter at loudobbs.com.

Finally tonight a story of celebration in Iraq. Sergeant James Mitchell and his wife Kathy finally had the wedding they always wanted. Unfortunately they still had to do it via satellite.

Sergeant Mitchell is currently serving in Iraq. He and his wife have actually been married for ten years. But they never had what they called a real wedding, until now. They had planned to hold a ceremony on their tenth anniversary, but unfortunately that anniversary fell while Sergeant Mitchell is serving in Iraq.

So, the couple was brought together at satellite at a Southern California television station where they renewed their vows and celebrated with family and friends. Our congratulations to the Mitchell and may they be reunited soon again. Our best wishes.

Thanks for being with us tonight. Please join us here tomorrow. Congersswoman Ellen Tauscher will be our guest to talk about why she doesn't support CAFTA, in its current form at least. Also tomorrow, George Borjas, professor of economics and social policy at Harvard University will join us to discuss the far reaching global impact of immigration and its impact on jobs, economics, the environment and more. We hope you'll be with us.

Good night from New York. "ANDERSON COOPER 360" begins right now -- Anderson.

END

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